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New Bill sparks fear of ‘outsiders’ taking over Saccos

By Dominic Omondi | Published Wed, May 16th 2018 at 11:19, Updated May 16th 2018 at 15:32 GMT +3
The fate of the proposed law lies in the hands of MPs

In summary

  • Huge depositors would have veto power over others
  • Critics say the proposed legislation has been crafted to wrest the control of groups from other members

A new proposed law could soon see sacco members with huge savings wield veto power on key decisions in the running of the organisations.

Through an omnibus bill, the new amendments to the Sacco Societies Act also open membership of saccos to outsiders and grants them special treatment, which flies in the face of the co-operative principle of equality of members.

An omnibus bill is a proposed law that covers a number of diverse or unrelated topics, usually used by the Government to make minor and non-controversial and general house-keeping amendments.

The proposed law has already raised an outcry, with players in the co-operative sector terming it an attempt by some individuals to dip their hands into Sh640 billion savings by the 22,000 registered co-operative societies.

There are currently about 15 million members in various co-operatives.

The amendments, if adopted, could soon allow for the entry of social impact members to the saccos, who will be treated differently from the rest.

For example, they will be required to vote only on certain issues affecting them. They will also not have to attend all the meetings like the other members.

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However, this will not prevent them from accessing such services as loans and investments from the saccos in what some members of the co-operative movement have described as a “take-over” of sorts.

The amendments to the Co-operative Societies Act and the Sacco Societies Act are proposed by the Statute Law (Miscellaneous Amendments) Bill 2018 (National Assembly Bill No 12 of 2018).

The social impact members will only vote on resolutions relating to the special fund, the investment committee and the special fund trustee, which will be created by the proposed law.

Contributions to these three kitties will come from these new members.

Already, the Co-operative Alliance of Kenya (CAK), an umbrella body for co-operatives in the country, has voiced its opposition to the new proposals, saying it was left out in the consultation process.

“It is our considered view that these amendments are not minor or house-keeping by nature. On the contrary, they have a potential fundamental negative effect on the co-operative sector,” said Daniel Marube, CAK’s executive director in a letter to the Clerk of the National Assembly.

Selfish interests

If it sails through in the National Assembly, the Bill will have a far-reaching impact on the way saccos and co-operatives operate in the country.

“It is not logical to create a class of members whose interest is to come under the roof of a sacco society only for the purpose of furthering their own selfish interests,” said Mr Marube.

He noted that the amendments flew in the face of co-operative policy and principles, including voluntary and open membership, democratic member control and economic participation by members.

The source of the amendments was not immediately clear, and CAK said they were also in the dark.

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